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Money News

What a Raytheon/United Technologies Merger Means

June 11, 2019

2 min read

The aerospace and defense industry may be getting a big shakeup soon.

On Monday, defense companies Raytheon and United Technologies announced their intention to merge, in a deal that could create a $100 billion company, according to reports. The combined business potentially would be an aerospace and defense industry giant, nearly rivaling Boeing for market cap.

The defense industry has undergone significant consolidation in the past few years, as companies have acquired one another in an effort to cut production costs as competition for defense contracts has gotten more intense, according to reports.

More about the proposed merger

More about the defense industry

The aerospace and defense industry is made up of companies that produce aircraft and spacecraft for both military and civilian use. It also includes manufacturers of military equipment, vehicles, and weapons, such as missiles and bombs.

It does not include companies that manufacture or sell guns and ammunition for hunting and recreational use. It also excludes companies engaging in non-aviation related commercial services at airports, like restaurants and shops.

The industry employs tens of millions of U.S. workers and drives billions of dollars in revenue every year. Approximately 16% of the federal budget, or more than $600 billion, goes directly toward defense and homeland security-related activities. Most, if not all of that money ends up going to companies in the defense industry.

In 2016, the sector employed 2.4 million people in the U.S. and generated $872 billion in sales.

Though there are hundreds of active firms, some of the sector’s largest companies include Boeing, Lockheed Martin, and Northrop Grumman.

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By Jeremy Quittner
Jeremy Quittner is the senior writer for Stash.

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